SEOUL, South Korea — Prosecutors in South Korea have decided not to charge first lady Kim Keon Hee over allegations of inappropriately accepting gifts last year, including a Christian Dior handbag, the Yonhap news agency reported, citing the Seoul prosecutors’ office.

The scandal has caused a political uproar in South Korea and contributed to a bruising election defeat for President Yoon Suk Yeol’s governing party in April.

After a months-long investigation into whether Kim violated…